Nabisco and Digital River
zdnet.com
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The company began evaluating the major players in April. It looked at more than a dozen service providers
before narrowing the field to four possibilities. In July the company settled on Digital River, the service provider
behind sites for 3M, Fujitsu, Siemens, and thousands of others. The reasons? The company's storefront
templates meant that Nabisco Gifts could be open for business in time for the holidays. Digital River's
fraud-protection technologies were vastly superior to what Nabisco could cobble together quickly. Digital
River's server farms—stocked with redundant Sun computers—promised the reliability, scalability, and
bandwidth Nabisco wanted in place from the get-go.
Fordham was sold. "The major driver for me," she explains "was their front-end expertise—the large amount of
e-commerce experience they had, their ability to link seamlessly with our fulfillment partner, and their ability to
partner with us in developing online marketing programs."
So what about costs and time to market? Setup cost less than $250,000, and monthly fees will run less than
$10,000. If Nabisco decides to make major enhancements to the site, it will pay extra. But chances are Digital
River will have worked on similar projects for one of its other clients and can spread out the costs. Nabisco also
plans to tap Digital River for online marketing campaigns—another area where its expertise is greater than
Nabisco's.
"From a cost perspective, it's difficult to compare an in-house alternative," Fordham hedges. "The way we
thought about it was that Digital River was giving us a much more capable, attractive e-commerce site for similar
dollars."
Perry Steiner, president of Digital River, estimates that most companies will spend $50,000 to $250,000 up
front and $10,000 to $40,000 per month for hosting when they go out of house for their e-commerce solution.
That price of admission buys you 24/7 management of your site. "Our business strategy?" says Steiner with a
laugh. "Don't spend a penny on e-commerce. Outsource it all to us."
By September the NabiscoGifts site was up and running in a controlled test: ordering and shipping gifts across
the country. The site was on target to open for business in November—in time for the holidays. "Our goal for
the first year," Shurts says, "is for every customer who orders from us to be thrilled."
Fordham is less categorical about their expectations for profits. "Our experience is still limited," she says. But
based on the e-business initiatives of others, she expects the site to "pay back very quickly, generally within the
year."
Nabisco's bricks-and-mortar distribution channel could throw a wrench in the works if it senses a competitive
threat from the site. Shurts explains that for now, the company is walking gingerly around the problem by
selling Internet-only products from NabiscoGifts. Eventually, gift recipients could find in their cookie baskets
coupons for . . . bricks-and-mortar retailers.
Nabisco plans to encourage its distributors to sell Nabisco gift baskets from their own Web pages. When
customers click on a wheelbarrow of Oreos at Walmart.com, say, they could be whisked transparently to the
Nabisco site on Digital River's server. Wal-Mart would take its cut for the referral. Alternatively, Nabisco could
include a gift-finder utility on its home page that would point customers to retail distributors like Wal-Mart. The
possible synergies are endless.
And what if Nabisco's distributors beat the company at its own game by selling more Nabisco gifts than
NabiscoGifts? "That would be fine," Shurts replies. "No problem," he says, all smiles. |
